Have a plan, support - and some cash
Using cash flow drawn from a business to fund personal expenses creates a leak that eventually sinks a big ship. This simple yet profound wisdom is the advice restaurateur and publisher Monwabisi Thethe shared as the guest entrepreneur at a summit this month staged by the I Am an Entrepreneur organisation with the theme "franchising 101: buying one, building one". Thethe, who was born in KwaThema on the East Rand, has a business portfolio that ranges from food and beverages to media and publishing, property investment and financial services. He is the founder and publisher of Blaque Life Quarterly magazine and a franchisee of Mugg & Bean, and also owns an advertising agency that boasts a number of blue-chip companies as clients."When I left the corporate world and wanted to open my first franchise, they asked me if I could survive the first 1,000 days without a regular salary," he said."The first three years are critical to the survival of any business, and it is during this time that most people make the mistake of using the cash flow generated from the business to fund their personal and day-to-day expenses."First-economy businesses like running a franchise require first-economy thinking. When you invest in a business such as a franchise, you don't think of your pocket, but you always prioritise the business," said Thethe.Borrowing the analogy of parenting, Thethe said responsible parents put the needs of their offspring before their own. "Most businesses do it the other way round - they want to eat first while the baby is starving, and then wonder why the baby is crying and malnourished." He advised aspiring entrepreneurs to resist the temptation of starting a business without a clear and solid plan. Thethe said he spent a year saving to fund his personal expenses before he left the corporate world."A mistake people make is to leave corporate without a plan. Your life will not be put on hold so you have to make allowance for that."I started small projects, and the revenue I generated was saved and invested in other smaller businesses. I bought and sold products to make commissions, and the funds from those commissions were put back into the business," he said. "Over and above this, I also offered consulting services on a freelance basis, and in other instances, I provided my services on a pro bono basis as a way to showcase and lure prospective business in future." To be a successful entrepreneur or franchisee, Thethe said, requires a certain personality trait."You need to understand that it won't always be about you. As soon as you understand that you are not always going to be the hero in your business, it removes the pressure off you."It is also important to set up robust systems as the foundation for your business. Remember, the deeper the foundations the taller the building." Emerging entrepreneurs often cite lack of capital as a major impediment."I didn't have the substantial capital required to buy my first franchise, but I didn't let that deter me," Thethe said."When I approached my bank . I had done my homework and identified a good site for the business. My motivation was compelling and the bank realised that my proposition was a no-brainer. I didn't have the capital, but I had the experience and qualifications to become a successful franchisor." Thethe said banks are more inclined to extend loans to customers they have a long-standing relationship with.Thethe compared franchising with the story of Jesus. "Taking the religion out of this analogy, franchising is similar to the narrative of Jesus, who recruited 12 people around him to sell his ideas to the world. This is what franchising means."A franchise is able to assist you to understand product quality and introduces you to systems that enable you to run your business more seamlessly."His advice to aspiring entrepreneurs and franchisees is simple: "The most important thing is the mindset and being surrounded by the right people."